AXIS Capital Holdings Limited ( AXS) Q4 2011 Earnings Conference Call February 8, 2012 10:00 AM ET Executives Linda Ventresca – Executive Vice President, Corporate Development Officer John Charman – CEO and President Albert Benchimol – Chief Financial Officer Analysts Josh Shanker – Deutsche Bank Vinay Misquith – Evercore Matthew Heimermann – JPMorgan Brian Meredith – UBS Jay Cohen – Bank of America Presentation Operator
Previous Statements by AXS
» Axis Capital's CEO Discusses Q3 2011 - Earnings Call Transcript
» Axis Capital Holdings' CEO Discusses Q2 2011 Results - Earnings Call Transcript
» AXIS Capital CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Axis Capital Holdings Limited Q2 2010 Earnings Call Transcript
Forward-looking statements contained in this presentation include, but are not necessarily limited to, information regarding our estimate of losses related to catastrophes, policies and other loss events; general economic, capital and credit market conditions; future growth prospects, financial results, and capital management initiatives; the valuation of losses and loss reserves; investment strategies, investment portfolio and market performance; impact to the marketplace with respect to changes in pricing models; and our expectations regarding pricing and other market conditions.These statements involve risks, uncertainties, and assumptions, which could cause actual results to differ materially from our expectations. For a discussion of these matters, please refer to the Risk Factors section in our most recent Form 10-K on file with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, this presentation contains information regarding operating income, which is a non-GAAP financial measure within the meaning of the US federal securities laws. For a reconciliation of this item to the most directly comparable GAAP financial measure, please refer to our press release, which can be found on our website. With that, I’d like to turn the call over to John. John Charman A very good 2012 morning to you, ladies and gentlemen. In 2011, AXIS celebrated its 10th anniversary, and I’m enormously proud of the success AXIS has had in realizing our founding vision. However, I cannot imagine any greater test for our company celebrating such a milestone than the events that have occurred in the past year. AXIS has experienced an unprecedented set of extremely stressful circumstances on both sides of its balance sheet. On the underwriting side, an extraordinary series of natural disasters, which are estimated across our industry over $100 billion, took center stage in 2011. The timing of these losses occurred against the backdrop of a prolonged soft market, but perhaps the weakest phase in this business cycle when adequate pricing remained extremely difficult to obtain.
Further, on the asset side, we experienced the persistence of abnormally low interest rates, which made low risk investment income difficult to achieve. At the same time, we weathered severe volatility in the financial markets, which agonized over the possible breakup of the Eurozone, threatening to send one of the world’s key economic regions into financial chaos.We also encountered a host of other uncertainties, including political paralysis, the ratings downgrade of major economies, and the fear of faltering growth in both the United States and China. As an Englishman would say, it certainly was a slow year for us. For the year, AXIS’s diluted book value per share declined by 3.3% to $38.08, reflecting the high level of catastrophe losses. Net income available to common shareholders was $9.4 million. Return on average common equity for 2011 was a nominal 0.2%. While we are unhappy with the adverse impact of these extraordinary events on our earnings, we are nonetheless satisfied with the ability of our portfolio to absorb the significant losses without impairing our financial strength. Over the long-term, however, we have compiled an exceptional record, and I’m pleased that even during such a difficult year, we continued to invest in our company and delivered franchise value to our shareholders. Diluted book value per share adjusted for cumulative dividends declared has risen at a compound annual rate of 13.7% from 2002 through 2011. Our return on average common equity, which was marginal in 2011 due to the high level of catastrophe losses, has averaged 14.2% over 10 years. We are navigating a transitioning market, which I will describe in more detail later. And we are proceeding with appropriate caution. Read the rest of this transcript for free on seekingalpha.com